The proposed Free Trade Agreement (FTA) between India and the European Union (EU) is expected to boost the small luxury vehicle market in the country. India is likely to significantly reduce import duty on luxury cars after the trade deal. So let’s know more about this.

Hardeep Singh Brar, president and CEO of BMW Group India, said the cut in import duties will expand the luxury car segment, which currently accounts for only one per cent of the total passenger vehicle market. Santosh Iyer, Managing Director and CEO of Mercedes-Benz India and Shailesh Hajela, CEO and Managing Director of Stellentis India have also welcomed the deal. They say now consumers will get better options and the ‘Make in India’ initiative will get a boost. Federation of Automobile Dealers Association (FADA) President Vignesh War also termed the agreement as a major breakthrough for the automobile sector.

Hardeep Singh Brar said the agreement will be a historic step for both countries, which will boost trade and promote exchange of new technology and innovation. The agreement should include provisions that support demand for luxury vehicles and strengthen the supply chain. Brar asserted that the reduction in customs duty on completely built units (CBU) would increase the reach of imported luxury cars and expand the market in India. Currently, about 5 percent of BMW’s total sales come from CBUs.

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Will the luxury segment boost consumer confidence?

Santosh Iyer, Managing Director and CEO, Mercedes-Benz India, said, “Our company is confident that the Indo-European Union FTA will boost consumer confidence in the luxury segment and also boost the country’s economic growth.” The agreement includes gradual reduction of taxes on vehicles and complete openness of auto parts as very important steps for the auto industry. This FTA will give consumers better options. Now the world’s best models will be easily available in the Indian market. Also new technology will be available soon.

Will India’s position in the global market improve?

Shailesh Hajela, Chief Executive Officer and Managing Director, Stellentis India, said that the completion of the Free Trade Agreement between the European Union and India is a major achievement. This will strengthen the economic relations between the two countries. It will also improve India’s position in the global market. Stellentis India sees this agreement as a step to further strengthen its long term promise of ‘Make in India for the World’. Lowering trade barriers will make manufacturing in India more competitive. This will increase export opportunities and make it easier for factories in India to connect with global supply chains. Consumers in India will now be able to easily access the latest and most advanced technology products from Stellantis, he added.

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Will FTAs strengthen Make in India?

FADA President CS Vignesh War said that the Indo-European Union Free Trade Agreement is a major achievement for the auto industry. We are proud that FADA has contributed significantly to this. At the behest of Commerce and Industry Minister Piyush Goyal, FADA took information from several European car companies and analyzed the data in depth. Based on that we submitted a detailed report to the Ministry. The gradual reduction in tariffs, tariff rate quota protection and safeguards announced today are in line with our balanced recommendations for India’s electric vehicle development. He said that more than 95 percent of European cars are being manufactured in India. This FTA will now further strengthen Make in India.